The California Earthquake and Its Napa Wine Impact

Will Wine Prices Rise After the Napa Earthquake?

"Does anyone know where the pets' food ended up?" Jill Klein Matthiasson calls out over the noise. A jack hammer cracks against what was the brick staircase to the front door of her historic yellow farmhouse, while 10 of us—volunteers and friends—pack and move boxes from the first floor. The entire house will have to be lifted and put back onto its foundation.

On August 24, a 6.0 magnitude earthquake hit the southern part of Napa Valley in California, otherwise known as the California Wine Country. The next day, the Matthiassons—who've been making wine in the region since 2002—were forced to move from their home, while also assessing the damage to their 2013 reds. Stacks of wine barrels throughout the winery collapsed during the earthquake, but just how much was lost or destroyed remains unclear.

It's a potentially devastating loss for the couple, who have risen to prominence as leaders in the U.S. wine industry, and were named "winemaker of the year" for 2014 by the San Francisco Chronicle. And they're far from the only winery owners still reeling from the earthquake. On Mt. Veeder, the Hess Collection winery lost almost 15,000 cases of Cabernet Sauvignon when two tanks were crushed in the quake. Hundreds of special collection bottles at Silver Oak Winery were destroyed. In Sonoma, Sebastiani Vineyards lost more than 100,000 gallons of wine from collapsing tanks.

Preliminary reports from Napa County's emergency response officials showed responses from more than 200 of the approximately 500 wine producers in the Valley. Damages are being estimated to be at least $50 million. With such staggering numbers, it's easy to wonder how the earthquake will affect the way wine is sold in the rest of the country. If you drink wine, will you be paying more for it in the coming months or years?

Keeping the Volume in Perspective

Don't start hoarding Three Buck Chuck just yet. "Even though we lost wine, we still probably have more to sell from what's remaining of our 2012 and 2013 wines than from the smaller previous vintages," says Jim Caudill of the Hess Collection. Looking at the actual numbers, Caudill explains that the Cabernet lost will be only about 8% of the winery’s total production for that wine.

Cate Coniff of the Napa Valley Vintners Association claims it's too early to report actual damage estimates—"We are in the very early stages of assessing overall loss of wine in the Valley," she says—but even so, the loss of wine for Napa Valley appears to be minimal.

"The real impact is on employees," Caudill points out. "They're having to scramble to get things ready both for visitors, and the upcoming harvest, while also cleaning up at home."

The Cost to Small Business

Small production wine labels were hit the hardest by the earthquake. For most, the owner is also the winemaker, and there is no one else to take on the clean-up. Also, smaller wineries often make wine as a collective, sharing equipment and winery space to economize. Wineries that stored their barrels side-by-side within the same space discovered their wine barrels thrown together in precarious stacks.

Carole Meredith and Stephen Lagier of Lagier-Meredith borrowed a sky lift crane from another winery and spent the week carefully working through the stack of collapsed barrels. Only by helping organize everyone's barrels could they hope to find their own. "We're hopeful that most of them can be safely rescued," says Meredith. "But it may take a few more days."

For small wineries, any volume loss could prove devastating. Lagier-Meredith, for example, made only five barrels of their 2013 Tribidrag. Losing just one barrel would mean a 20 percent loss.

Craig Camp of Cornerstone Cellars, whose barrels are also collapsed in a shared facility, explains. "When you lose a vintage," he says, "you don't just lose the wine from that year, you lose the wine you achieved through a lifetime of experience."

What About Wine Prices?

Despite the damage, don't expect the price tag of California wines in your local supermarket or wine store to skyrocket. Even small labels, like Lagier-Meredith, don't anticipate raising prices. The earthquake "will have no impact on our wine prices," Meredith explains.

Caudill agrees. "We do not expect an increase in prices for our wines," he says. "The truth is, we are not fully recovered from the economic downturn. There are lots of reasons to maintain price integrity." An increase of just a few dollars per bottle could make other wines more attractive. "Our business model depends on delivering value for our wine," Steve Matthiasson says. "If our prices go up it destroys our whole model."

Facing the 2014 Harvest

In the midst of earthquake clean-up, harvest continues. "A lot of people are helping each other out," Coniff says. "Sharing equipment and lending a hand. With very few exceptions, wineries are open." The vines themselves—the fruit that will go into making the 2014 vintages—appears to have been unaffected by the earthquake, and that may be the best news of all.

"Vines are used to earthquakes," Matthiasson says. "They're not like us. They don't build houses."

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